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On their bikes

Foxconn’s boss Terry Gou might well count 2007 as one of the best years of his life. Apple’s Steve Jobs had just launched the iPhone and in doing so was about to make Foxconn the world’s largest contract manufacturer for electronic goods for the decade ahead. Gou was a regular on the tabloid backpages as well, with rumours he was dating the Taiwanese actress Lin Chi-ling. And he even found time to invest in Empire of Silver, a film about the rise and fall of the banking clans in his native Shanxi province (a WiC special feature on these clans is available for download in the Focus Editions section of our website).

But that was also about the time that Foxconn began to make nastier headlines as “the blood and sweat factory”. The inglorious title refused to go away after international reports on the working conditions faced on the Taiwanese firm’s Shenzhen production lines. These inspired Leslie Chang’s acclaimed Factory Girls, a 2009 investigation into the lives of millions of migrant workers staffing China’s assembly lines (see WiC6). The furore worsened when a number of Foxconn’s workers committed suicide, some even jumping off the factory roof.

That meant the standard narrative about many of China’s migrant workers was one in which they were seen as powerless and even oppressed. Over more recent years, the image of the migrants has started to change. In the few weeks after this Chinese New Year holiday, the local media was reporting less about the grievances of factory workers, for instance. Instead the complaints were coming from the factory bosses: that they were finding it much more difficult to hire enough employees to make stuff.

The phenomenon is not entirely new (see WiC54) but according to Caijing magazine the problem is getting much more serious for manufacturing bosses – to the extent that it has now become a structural challenge rather than a seasonal one (in the past the staff shortages were worst after holiday periods when migrants were reluctant to return from visits to their hometowns).

At the root of the issue today, Caijing noted this month, is a new generation of younger workers who are looking at other options for employment in sectors like logistics.

“Young people prefer to deliver food rather than working in a factory. That’s why the manufacturing industry is suffering from a chronic shortage of labour,” Caijing reports.

Data from the government suggests that nearly three-quarters of the workforce in the food delivery sector is below 35 years of age. More jobs are becoming available all the time. When the biggest food delivery firm Meituan-Dianping was founded in 2015 it hired about 15,000 staff. Its number of delivery riders has since grown to a staggering 2.7 million.

Not all of these delivery people are on the full-time payroll. Many work part-time, on a self-employed basis, just like drivers for Uber. Working for Foxconn might be a more secure job, with a better salary for certain roles; but growing up in the internet age, the new generation of migrants prefers the relative freedom of working in delivery jobs. Unlike their parents, they aren’t content with the daily routine of the factory floor, the staff canteen and then bedding down in a dormitory.

“In the courier business, working hours are more flexible and people have control of how hard they need to work. They can still make enough if they work hard enough,” Caijing says. “And more importantly, a food delivery man can reach out to more people and everyday lives. This is very important for young people these days.”

According to the 21CN Business Herald, major courier firms such as SF Express and ZTO have now hired more than three million fulltime staff. The number of workers in the logistics industry in general, which incorporates food delivery as well as ride-sharing apps, could be over 30 million.

This makes the sector the fastest growing job market in the country. In a way it also underlines the government’s effort to skew the economy away from an export-driven model to one based more on domestic consumption. In the past millions of migrant workers kept the factories running, powering China’s manufacturing miracle. Now an army of delivery people supports the urban economy in different ways, underpinning much of China’s e-commerce sector and the spread of the O2O economy.

The trend is also contributing to the hiring challenges for conventional manufacturers which have been forced to pay higher wages. 21CN reported last week that manufacturing businesses in the Yangtze River Delta are coming under greater pressure to consolidate simply because they cannot afford the greater pay needed to attract workers.

And how about Foxconn? It has been moving some of its production lines from coastal locations like Shenzhen to inland cities where wages are lower and the labour supply less stretched, such as Henan’s Zhengzhou. It has also championed a push into automated production, promising to replace hundreds of thousands of its human workforce with robots. Progress here is unclear, although the company seems to have missed some of its milestones in transitioning to more automation.

Of course, Foxconn must also respond to the demands of its key clients like Apple at a time when demand for the iPhone has shown signs of peaking. Terry Gou’s company is still hungry for business, however, with Chinese media reporting that it has plans to hire 50,000 more workers in Zhengzhou after winning a major contract to produce Huawei’s P30 smartphones.

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